What Do Customers Want from You?
As we discussed in last month's edition of MarketScope, customer loyalty is the building block of ongoing success and profitability in business today.
Logically, the financial advantage is somewhat obvious; loyal customers are advocates who collectively deliver sales, marketing and public relations efforts for you without salary or commission. What's more, loyal customers tend to buy more and become more profitable with each year they remain a customer. Acquisitions, on the other hand, are costly and the return on a new customer is dubious at best.
FPS recently released a short audio/visual demonstration revealing how these principles play out in commercial banking using relative industry retention and acquisition statistics [http://www.fpsc.com/Return_on_Customer-LC]. For example, as far back as the year 2000, a joint research report on value creation by Cap Gemini Ernst & Young's Center for Business Innovation and the Wharton Research Program found that financial institutions rated customer-related performance over the long term as being far more important than short-term financial performance.
Perhaps for the first time in history, creating shareholder wealth in the short term, at the expense of customer value over the long run, is being recognized for the recipe for failure that it is. A recent Bain & Company study found that only 22% of the world's leading firms achieved real, sustainable growth of even 5% per year between 1994 and 2004. Loyalty experts like Fredrich Reichheld attribute this underwhelming statistic to precisely that short-term way of thinking.
In contrast, enduring profitability turns out to be a by-product of creating real value for customers. In his new book, The Ultimate Question, Reichheld says that the litmus test for how you're creating value for customers lies in their answer to one question: "Would you recommend us to a friend?"
So let's bring this big-picture ideology down to the world of business banking. It's fairly safe to assume that your cash management customers are some of your most profitable, and that ensuring their loyalty and having them as advocates is to your fiscal advantage. The question then becomes, "What do they want from you?"
A recent Greenwich Associates report provides some telling answers. In its "2006 U.S. Cash Management Research Study," the firm interviewed 784 cash management specialists and other financial professionals to find out what they want from their bank(s).
In summary, the study found that corporate practitioners seek a deeper level of service and expertise from a fewer number of providers. In terms of what these customers are looking for specifically, Greenwich Associates Managing Director Don Raftery says, "Banks that deliver distinctive levels of service and high-caliber product capabilities are winning more business ... and are keeping it." He goes on to emphasize the importance of a more consultative approach with clients to address the growing complexity of their cash management needs. Now more than ever, clients need ready access to in-depth industry expertise, and both qualitative and quantitative advice.
Loyalty leaders who provide clients with precisely this type of critical business intelligence are seeing the return on their efforts. A good example is ABN AMRO, an FPS client spotlighted in the March 2007 edition of ABA Bank Marketing magazine ("ABN AMRO: How E-Newsletters for Treasury Customers Grew From Nothing into Powerful Marketing Tools," page 36). In the case study, ABN AMRO discusses how it created value for its treasury clients by providing relevant business intelligence, and how those efforts are being received.
The only value a financial institution will ever truly create is the value that comes from its customers—both now and in the future. Taking steps to deliver optimal value to these customers is the key to profitability and survival going forward.
Ten Timely Tips for Mastering the Complex Sale
By Jeff Thull, CEO, Prime Resource Group
Selling in today's complex banking world requires a detour from traditional sales techniques. Here, we provide 10 recommendations for how you can become a valued advisor to your customers and close more deals.
1. Walk away from bad sales. Salespeople are often so concerned with "getting the order" that they write business that isn't good for themselves, their financial institution or their customers. In fact, nearly 35% of all sales are bad sales. They leave either the customer disappointed or the seller with excess costs and diminished returns. Walking away from situations that aren't profitable for anyone is the right thing to do, and opens salespeople to other opportunities and successes.
2. For spectacular success, prepare spectacularly. The research and dedication that sales professionals put into understanding their customers' critical issues and dissatisfactions—and recognizing the business opportunities that arise from them—takes time. Fail to invest this time and you'll fail to close the deal.
3. Don't let customers self-diagnose their problems. While you continually diagnose problems afflicting various businesses, your customers only make decisions regarding your financial solutions once a year or even less. Successful sales professionals must guide customers through the process of making sound business decisions by assuming the role of a valued advisor or business consultant.
4. Don't refer to your competitors when you're with customers. Asking a question such as, "Which other banks are you considering?" conveys a traditional sales image of concern about the competition rather than concern over the customer's situation. A better question would be, "What other financial options you are considering?" Discussing your competitor is irrelevant if your customers understand the significant value you can add to their business.
5. Never ask for the order. If you follow the diagnostic protocols and the customer recognizes the problems your financial solution can eliminate, the decision to purchase your services will be the next logical step in your customer's decision process. The arm-wrestling of traditional selling is replaced by the acknowledgement that a mutually beneficial business relationship is developing.
6. Gain credibility through the questions you ask rather than the stories you tell. Every prospect expects salespeople to say good things about their business and the products they sell. Thus, the stories you tell are rarely taken seriously and often are ignored. What is taken seriously is the concern and knowledge you display in learning about the customer's situation. Be genuinely curious and ask thought-provoking questions to understand the customer's unique situation, and help them make a good decision. When the customer hears your questions he should think, "She wouldn't ask that if she didn't understand our business."
7. Always be leaving. Customers have learned through experience that traditional salespeople don't take "no" for an answer. Displaying a willingness to accept the customer's view reduces tension and lets the customer feel more comfortable expressing his feelings. This relaxes you both and builds an atmosphere of mutual cooperation and trust.
8. Don't get emotionally involved. Salespeople don't have problems, their customers do. As you perform your diagnosis and lead the customer through a quality decision process, "yes" is not a problem and neither is a "quality no." The customer who is losing $1M in sales because they won't or can't replace old machines that are inefficient and continually break down has the problem. You only run into problems when you feel pressured to get the order now and come across as "too hungry." Allowing yourself to get emotionally involved is being defensive and biased toward your needs, not your customer's. Instead, operate with an objective, clear mind to methodically unravel the customer's challenges so you both can reach a mutually beneficial understanding of the problem and the solution.
9. Understand that people never say what they really mean ... at first. People learn from an early age that saying what's really on their minds can have negative consequences. As a result, they are cautious to express any real feelings until they feel "safe enough" with another person. The skilled salesperson "peels the onion," which helps the customer feel safe and free to express their opinions and thoughts.
10. Don't try to sell a group. A guaranteed prescription for failure is to present to a group without first identifying and appealing to the critical perspectives of each member. By the time you present the solution, there should be no surprises; everyone should already know how the proposed solution will impact their responsibilities and yield the intended benefits.
About the author
Jeff Thull is a leading-edge sales and marketing strategist and valued executive advisor at major companies including Shell Global Solutions, 3M, Microsoft, Intel, Citicorp, IBM and Georgia-Pacific.
He is also the author of the best-selling books Mastering the Complex Sale: How to Compete and Win When the Stakes are High and The Prime Solution: Close the Value Gap, Increase Margins, and Win the Complex Sale. Jeff’s new book, Exceptional Selling: How the Best Connect and Win in High Stakes Sales, is now available.
For more information, please contact: Prime Resource Group, 3655 Plymouth Blvd., Suite 110, Plymouth, MN 55446, [email protected], www.primeresource.com, 1.800.876.0378 or 763.473.7529, Fax: 763.473.0792.